Wednesday, July 29, 2009

Magellan Midstream Partners buys Longhorn Pipeline out of bankruptcy

TULSA, Okla. - Magellan Midstream Partners, L.P. announced on July 27 that its purchase of substantially all of the assets of Longhorn Partners Pipeline, L.P. has been approved by the bankruptcy court. Closing is set for July 29, with no additional approvals required.
The 700-mile common carrier pipeline system transports refined petroleum products from Houston to El Paso, Texas. A terminal in El Paso, comprised of a five-bay truck loading rack and over 900,000 barrels of storage, is included in the purchase.
The terminal serves local petroleum products demand and distributes product to connecting third-party pipelines for ultimate delivery to markets in Arizona, New Mexico and, in the future, Northern Mexico.
The purchase price for the pipeline system is $250 million plus the fair market value of line fill, which is currently estimated at approximately $100 million. Management intends to finance the acquisition with debt.
"The Longhorn system is an excellent fit with our existing asset portfolio and our stated intent to grow our presence in the Texas market," said Don Wellendorf, chief executive officer. "Magellan is quite knowledgeable of this system because we have served as its operator for the past several years. We feel confident that our business model as an independent pipeline company will attract customers interested in transporting petroleum products to the Southwestern area of the country and are already in discussions with a number of potential customers."

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